IFRS 17 Example: Initial measurement of insurance contracts

[@habeebmobolaji_]

Thanks for this practical and concise video, totally relevant and helpful. Please keep them coming!

[@Camille-v3z]

Please make subsequent measurement also… this is really helpful

[@oyetunjihonour825]

Thank you for always delivering great piece of Standards 🙌

[@yogeshnijhawan8983]

Great content. Please keep uploading more examples b'coz this standard is little bit more subjective.

[@anoopg23]

Amazing explanation ❤ thanks a ton!!

[@cakrishnaswadekar07]

Thanks Silvia for this amazing video, pls cover PAA initial and subsequent measurements also.

[@yuehangli9926]

Dear Silvia, thank you soooooooo much for this super detailed video! Previously I was super confused that since CSM fills the gap between PV of inflows minus PV outflows and RA then we should end up with 0 contract liability, then how could we have such a huge amount of insurance contract liability on our B/S. Now I see this is due to the time difference of premium payments and potential claims. Really appreciate this! But one thing I still do not understand well: why do the insurers sign onerous contract? Why are they willing to make loss instead of profit?

[@CPDbox]

Thank you! :) To your question - many reasons are possible. One that comes to my mind is simply business and acquisition of market share - offering some insurance policies to acquire new customers, then the next year renewing the policy at the profitable rate (and not all the customers will shop around for the new policy when the premium increases).

[@chideraozomma8035]

Thank you so much . This is so helpful ❤

[@forevereatingasmr1324]

How come the discounting of future cash flows resulted in a higher amount? I thought discounting future cash flows to present value will be lower amounts?

[@CPDbox]

It depends what are the future cash flows. In this case, cash inflow is NOW, therefore the same amount as discounted one (3 000) but future cash outflows are later on, therefore the present value of total of - 2 400 is just - 2 128, which is lower than 2400 in absolute terms. Look at it as to debt. If you take a liability, it devalues over time, so the present value of your debt is greater or more favorable to debtor than if the debt would need to be paid now.

[@chanukkah7861]

Lovely video, can you do a video for subsequent measurement, please??

[@Ridhojz]

Thanks Silvia

[@mohammedessam4969]

I don't understand the context of the video. Could you please clarify if this liability for remaining contract (LRC) Calculation under premium allocation approach (PAA) ?

[@CPDbox]

This is totally basic example on initial recognition of insurance contracts, clarifying how you calculate estimates of fulfilment cash flows, incorporate risk adjustment and see if the contract is onerous or not, under general model. I strongly recommend checking my premium course the IFRS Kit if this is not clear enough.

[@sheltongeorge594]

@sheltongeorge594 0 seconds ago Thank you for explaining. Could you provide an example or illustration demonstrating subsequent measurement journal entries? Specifically, I'd like to see how the liability for remaining coverage is updated in subsequent periods

[@CPDbox]

Hello, that is a bit long lecture and I cover it in my courses www.cpdbox.com/ifrs-kit/. Thank you!

[@thapelomokonyane8040]

@@CPDbox How much material do you have for IFRS 17 in terms of number of vides and length of videos and other materials in CPDbox?

[@CPDbox]

Net running time is about 3 hours.